www.iprhelpdesk.eu
European IPR Helpdesk
Fact Sheet
Intellectual property and business plans
October 20151
Introduction .......................................................................................................... 1
1.
Business plans: purpose and link with IP ...................................................... 2
2.
IP related information in the description of the business ................................. 3
3.
IPR issues within the description of the global business and technological
ecosystem ...........................................................................................................11
Introduction2
A business plan is a strategic document providing details on how a given
innovation is going to be commercialised and brought to the market by an
existing company or a newly created venture. The document typically describes
the entire path to the market and provides details on the following issues:






1
Description of the company: status, objectives, managers, shareholders,
and mission;
Description of the products and services offered, including further
developments being foreseen;
Description of the target markets/clients and competitors;
Description of the marketing strategy of the company and the sales and
distribution channels being used;
Description of the business organisation, including employees, suppliers,
manufacturing sites, purchasing and outsourcing issues, as well as
technology partners;
Provision of a financial plan including profit and loss projections, a proforma balance sheet, an estimation of the external funding required and
This fact sheet was initially published in November 2014 and updated in October 2015.
This fact sheet was written by Catherine Delevoye, expert in legal issues at Technoport (business
incubator, co-working space and FAB lab in Luxembourg).
2
The European IPR Helpdesk
www.iprhelpdesk.eu
the sources of funding available for the business (e.g. bank loans or equity
investors).
1.
Business plans: purpose and link with IP
1.1
The purpose of business plans
Business plans are written for communication and strategic planning purposes.
They fulfil different business needs:

Internally: business plans can be used as support tools for guiding
strategic decisions and providing team members with a common vision
and clear objectives in terms of technical and commercial developments.
They moreover provide financial targets and others indicators which are
extremely useful for performance management purposes inside the
company.

Externally: business plans are used to explain the business strategy of the
company to external investors and partners in order to raise money or
enter into specific collaborations with other businesses. The scope is not
only to arouse interest in the company’s activities but also demonstrate
that the entrepreneurs have precise plans for the future and that those are
based on sound and documented strengths and assets. From this point of
view, business plans can be used not only to describe the company itself
to external stakeholders but also to position it precisely inside the larger
commercial and technological surrounding ecosystem.
1.2
The link between business plans and IP
Since the scope of the business plan is to describe not only the business logic
behind the commercialisation plans, but also the assets and resources that will
make the business successful, the definition of a strong intellectual property (IP)
protection and management policy and the business planning exercise are
strongly interconnected.
First of all, the IP owned by or accessible to the company owners will strongly
influence the business model chosen for operating on the market. Secondly, the
business plan will typically refer to intellectual property (IP) and intellectual
property rights (IPR) to describe the company's unique specificities and the
assets and resources that can be called upon for establishing win-win
collaborations with clients, partners and investors. Finally, the comparison of
those assets with the IPR owned or likely to be acquired by both clients and
competitors are to be considered key indicators of the commercial viability of the
business and should influence its strategic positioning inside the broader
ecosystem.
2
The European IPR Helpdesk
www.iprhelpdesk.eu
IP should therefore be taken into consideration both when drafting the global
strategy that will be described in the business plan and when actually writing the
document itself.
2.
IP-related information in the description of the business
The IP policy of the company is to be considered a key element in the business
plan, which can bring very strong added value to the venture if appropriately
described and valued, but can by contrast hamper the confidence and interest of
external stakeholders in the business if not described in a very clear or
comprehensive way. Any uncertainty in terms of freedom to exploit the
technology underpinning the products or services or the ability of the
entrepreneurs to secure sound relationships with other players on the market will
raise doubts about the viability of the business. The activities should moreover
be communicated in the business plan so as to be easy to understand and
globally coherent with the global business goals.
In terms of describing the business model, the issues listed below are frequent
challenges and drawbacks which entrepreneurs may come across when
elaborating business plans. All of them are related to a description of the IP
assets available to the business which is poor, vague, not practical enough or not
business-oriented.
2.1
Business plan – description of the IP assets owned
2.1.1
Description of the products and services
When writing a business plan, a first problem for the entrepreneur is to assess
how many technical details and specifications should be included in the
description of the products and services being offered. That issue depends on
what is actually needed to understand the technology being commercialised and
its added-value for the targeted customers. The focus should actually be on the
latter topic, the typical scope of the business plan being to present what the
company has to offer in order to raise the interest of potential business partners.
The good news from this point of view is that disclosure in detail of the secret
know-how owned by the company, which should be considered confidential
information and be very carefully disclosed to third parties, is usually considered
as not necessary in the description of the products and services. The main scope
in the business plan is to be able to picture the technology from the point of view
of an industry client, answering questions such as “What does the product do?”,
“How do I know that it actually works?”, “What is the added-value compared to
other products (e.g. technologies)?”.
Technical drawings are welcome in the business plan to illustrate the
technological offer, but technical processes and concepts should be described in
a concise and user-oriented way. Do not hesitate to have your description
reviewed by people with a business profile, who may be more able to have a
3
The European IPR Helpdesk
www.iprhelpdesk.eu
synthetic view of the technology than the development team or technology
experts.
A must-have in the business plan is a summarised description of the products
and services in a few short sentences at the very beginning of the document
outlining the company’s mission.
Example of a products and services description:
“We are an innovative high-tech start-up company, whose goal is to
bring emerging technologies like the semantic web, location-based
services, and ubiquitous computing together for new mobile applications.
We use these technologies for enabling our clients to provide
personalised services to their customers with very little effort and cost.”
The extensive use of technical jargon and an imprecise description of the
different modules of a multi-element technology for example, could be confusing
for business plan readers.
Companies should also consider products and related trade marks and possibly
describe the different products in the business plan under the specific brands
that will be used to promote them. For consistency purposes, it may be useful to
have one trade mark for the global product range and then break it down into
different solutions or modules, as indicated in the following example:
“Our current financial software product line includes four different
modules collectively known as the ABCD™ Suite. The first module,
ABCD™ Tracker, is aimed at customer identity verification and transaction
monitoring. The second module, ABCD™ Server…”
2.1.2
IP ownership and the IP protection policy inside the company
Innovation is often the result of team work. The technology being
commercialised may have been developed by different employees or partners
and may then have been further packaged and refined with the support and
involvement of third party researchers, external designers, software or hardware
suppliers.
Bringing a proven and fine-tuned technology to the market is obviously an added
value in the business plan, and having involved suppliers and customers in the
product development process at a very early stage is typically considered an
additional asset.
However, that may induce uncertainties about the owner of the IP assets being
commercialised.
4
The European IPR Helpdesk
www.iprhelpdesk.eu
The following example for instance raises questions as to the IP ownership in a
situation where the legal basis under which the IP has been co-created,
published and shared in the context of a consortium are not clarified and the
ownership of the research results developed is not clearly defined:
“A prototype showing the feasibility of fully-secured personalised
proximity messaging systems was developed by researchers in the
framework of an ESA-funded project involving seven leading universities
and research institutions. The technology involved has been extensively
published and presented on numerous international scientific papers and
conferences. Based on this research experience, the manufacturing and
distribution of a commercially successful system is the main current
business goal of our company.”
Regarding the ownership of IP, a business plan should raise no doubts as to the
products and services owned/co-owned by the company and those accessible
under licensing agreements with third parties.
The transfer of the ownership to the business is the simplest and best solution
when possible and is very often required by private equity investors. In the case
of co-ownership of the IP, a potentially exclusive and in any case long term
licensing agreement has to be alternatively sought to secure access to any
required technology and freedom to operate on the market. Due diligence
performed by investors heavily focuses on IP. Investors will typically check the
status of all intellectual property rights owned by the company and take them
into account in their pre-money valuation of the business.
A second element which has to be made clear in the business plan is the extent
to which the rights on the IP being commercialised by the company are or can be
registered and therefore efficiently prevent the entry to the market of potential
copycats.
If the IP cannot be registered, how a technological advantage will anyway be
maintained in the future is a key point to consider. This can be linked for
instance to a very strong governance policy in terms of file management inside
the company and restriction of know-how access to a very limited group of
people (e.g. funders and the top management team with shareholder
agreements in place).
The following examples illustrate how to clearly describe IP ownership and which
measures could be put in place to prevent unauthorised reproduction or coping of
the company IP:
5
The European IPR Helpdesk
www.iprhelpdesk.eu
“To date, our company has deposited five patents that have been
developed in just a few months of research (see list below). Three of
these patents cover our core production technologies. The others cover
complementary applications of the system. We have identified additional
areas where patent applications are currently being formulated.”
“Our story started with the invention of a machine that generated
sinusoidal mechanical vibrations. Although that invention was patented,
it was never commercialised. Realising the patent’s considerable
potential, we contacted the inventor. We bought out the inventor’s stake
in March 2014, taking ownership of all intellectual property and
prototypes and founding our company. The intellectual property was
fully transferred to the company at the time of incorporation.”
“Our technology is software-based and cannot be easily patented, at
least in Europe. The product lifecycle is moreover quite short in our
business areas. Product leadership will therefore be maintained mainly
via an ongoing investment in new product development strategy. Key
founders are engaged by contract to remain in the business for the next
5 years at least. Access to their know-how and their commitment to the
business development are therefore fully secured.”
“We will keep our trade secrets that we acquire in manufacturing,
assembly, control and support closely to ourselves and will not
outsource production or even services to a country with low ethical
standards on intellectual property. The company’s technological basis,
administration and customer correspondence is secured on encrypted
servers. In addition, strict employee management policies and contracts
have been put in place to avoid any leakage of confidential information
inside the group. ”
“The community trade marks X and Y, as well as the domain names Q
and Z are registered and held by the company. The domain names are
registered in their .net, .com and .eu variants.”
6
The European IPR Helpdesk
2.2
Contractual relationships with third parties
2.2.1
Technical agreements in place or foreseen
www.iprhelpdesk.eu
The contracts secured or planned with external contractors, researchers,
integrators or suppliers should be clearly identified in the business plan and a
policy should be in place for developing strategic relationships with those
external stakeholders. The scope and framework of any technical partnerships
should be clearly defined. Access to key IP needed for future product
developments should be secured, while too restrictive and locking-in alliances
should be avoided. Make sure that the company has access to what it needs but
remains free to act and react in a competitive way notwithstanding existing
formal agreements. Those issues will typically be checked by potential investors
or new technology partners interested in the business. Setting out the global
partnership scheme chosen for the company in the business plan will provide a
clear vision and roadmap in terms of collaborations and will help to clarify any
potential uncertainties.
Here are some examples of precise and well-defined technical partnerships
descriptions in a business plan:
“That partner will supply engineering services to our company under a
non-exclusive short-term manufacturing contract basis. No transfer of
rights from our side and no access to our proprietary IP are involved in
the agreement.”
“Pursuant to patent cross-licence agreements, we license our patent to
our automotive partner for integration into their own product range in the
United States and, in return, receive rights from that corporation in
respect of the following patents which they own and license:..”
“Our company will benefit from fundamental or applied research results
in new computational algorithms based on its long-term partnership
with X. Future product developments with X will be the subject of
collaboration or R&D agreements that clearly define who owns the IP. In
the event that the company funds the research, it shall own the IP. In
the event that foreground IP in a project is meant to be owned by X, the
company will negotiate a first option on an exclusive, worldwide sublicensable license on those assets in the framework of the collaboration
agreement signed for that specific project.”
7
The European IPR Helpdesk
www.iprhelpdesk.eu
2.2.2. Commercial agreements in place or foreseen
The sales strategy is one of the most important sections of the business plan,
since the overall goal of the document is to help clarify, focus and question the
business strategy chosen to exploit a given know-how or technology. A typical
mistake made by entrepreneurs when describing their market size is to address
the global market potential without questioning the part of it which is actually
achievable to them.
Most businesses require establishing ties with adequate partners and allies to be
able to reach and fulfil the needs of a very wide range of somewhat diverse
target customers. Those relationships should be carefully drafted so as not to
give unlimited access to the company’s core intellectual assets to third-party
organisations without proper legal frameworks in place.
Be as precise as possible in the description of your existing and future
partnerships: Are they long-term, exclusive or limited to a given territory? Are
there some contractual milestones and targets which have to be achieved by
each specific partner?
The following description for instance is to be considered too vague in the
context of a business plan:
“We will support and enhance our direct sales efforts through the development of
strategic partnerships arrangements at different levels:
•
•
•
•
consulting partners;
solution partners;
hosted solution providers;
OEM partners.”
Commercial exclusivity is typically to be granted only when there is a specific
need justified by the global business strategy.
Example: exclusivity is given on the commercialisation of a 3D camera to a very
large consumer device manufacturer with worldwide distribution channels, given
the fact that the entrepreneurs are not interested in serving that B-to-C market
themselves and intend to focus in the long term on a number of B-to-B
professional market segments instead.
Exclusivity has a price, which should be reflected in the revenues derived from
the commercial agreement as described in the financial plan for the business.
On the other hand, direct and indirect sales channels, if co-existing, should be
organised in a way so as not to jeopardise each other. A clear vision and strategy
in the field of IP commercialisation naturally induces a clear division of roles on
different market segments or different territories.
8
The European IPR Helpdesk
www.iprhelpdesk.eu
The following examples illustrate commercial agreements description in business
plans, referring to precise IP-based distribution schemes:
“It is our strategy to have a business model that will generate
recurring sustainable revenues. Actually, as soon as the company has
a perfect mastery of its technologies (in two years from now), it will
enter commercial agreements with already identified leading
manufacturers in their respective market. The partnership model has
three arms:
• the mere selling of finished products by our partners as far as RFID
tags are concerned;
• manufacturing and distribution contracts with payment of licensing
fees (industry standards are just under 10% but with excellent
margins), as far as solar cells are concerned;
• fee-based know-how transfer contracts where we will put at our
partners’ disposal our skills and core competencies for improving their
own product line as far as biochips are concerned.”
“We will target potential non-exclusive licensors for our equipment,
looking for organisations which have:
• the capabilities to install the equipment;
• access to our specific end-user industrial markets as described in the
market section;
• an established marketing, sales, distribution, fulfilment, customer
service and maintenance support infrastructure;
• past history of licensing other organisations' products and services.”
2.3
IP-related elements in the financial plan
The “Financials” section of the business plan is aimed at describing the current
status and expected development of the business, both in terms of assets and
financial revenues. A correct estimate of the value of the company itself and the
market value of its products and services will provide credibility to your financial
estimations. Although those sections typically require the involvement of a
professional accountant, make sure that you understand the global logic behind
the numbers and that you are in a position to answer questions on the different
assumptions and values integrated into the business plan. This means being
aware of the value of the IP assets owned by the company on the one hand and
being able to discuss the IP-related revenues which can be obtained from the
target customers on the other hand.
2.3.1
Estimate the value of the IP assets owned by the company
Being realistic on the value of the IP is especially relevant when looking for
external investors or if you plan to use your IP assets as security for a loan. The
9
The European IPR Helpdesk
www.iprhelpdesk.eu
use of external expertise and a well-known accounting method is highly
recommended for the valuation of your business assets. The figures included in
the business plan should be realistic and based on a proven IP valuation
methodology. A range of existing literature can be used to familiarise yourself
with the different methods, as well as their advantages and drawbacks3.
Please note that the calculation is always an estimate and that the value may be
subject to further negotiations when discussing with potential partners or
investors. However, a fixed amount needs to be incorporated as illustrated in the
projected balance sheet here below.
2.3.2
Set realistic expectations in terms of IP-related revenues
Standard royalty rates in a given technical field can be derived from searches on
the internet and business databases as a basis for checking the adequacy of
expectations with the rates used on the market.
If licensing or other IP-based revenues are representing a significant amount of
your projected revenues, it may be worth describing your global policy in the
See for instance the IPR Helpdesk Fact Sheet on Intellectual Property Valuation, available in our
online library.
3
10
The European IPR Helpdesk
www.iprhelpdesk.eu
business plan. Standard licence agreements should set minimal expectations,
clearly stated and included in the formal collaboration agreements with the
commercial partners.
Here are some examples of information about the existence of such targetoriented clauses in the standard licensing agreements of the company:
“Each licence agreement includes a performance clause that ensures that
the licensing agreement doesn’t remain into force if the licensor fails to
perform as forecast.”
“Our licence agreements include clauses setting pricing options and
discounts to ensure that licence income levels are being maintained.”
3.
IPR issues within the description of the global business and
technological ecosystem
Since opportunities always arise in a given context, a precise description of the
chosen market segments is required in the business plan. Moreover, explaining
how those markets will be successfully approached in spite of existing
competitors or of the availability of alternative technologies, is a very important
element in the description of the business model and the related
commercialisation strategy.
3.1
IP intelligence as a market analysis tool
Searching registers for detailed legal, technical and business information about
other market players indeed brings flesh to the bones for the market analysis in
the business plan and allow the mapping of the most relevant business and
technological ecosystems. Patent databases especially can be used for such
purposes4. Beyond ensuring that you have freedom to operate and can market
your technology, it can provide objective and neutral knowledge to feed the
market related section.
Here is an example of knowledge derived from patent search which can be
integrated in the market-related section of the business plan:
“The evolution of patent activity over the years for fraud in electronic funds
transfer or fraud in financial transactions shows a strong need and interest
in new technologies. This technology had a first peak in 2000 and is
currently still very active. Based on the list of countries in which a high
number of patents have been filed, there is a worldwide market with strong
opportunities in the United States, Australia, Europe, and Japan.”
For details on patent search, please consult the fact sheets “How to search for Patent
Information” and “Automatic Patent Analysis” available in the online library.
4
11
The European IPR Helpdesk
3.2
www.iprhelpdesk.eu
IP monitoring as a competitive positioning tool
A thorough and detailed analysis of existing competitors provides strong-added
value to any business plan. Competitors should not only be identified but their
market presence, strategies and strengths should be well known and described.
It is recommended to include a table in the business plan summarising the
competitors’ market status. That can illustrate the unique character of the
products or services of a company and how they are superior to competing offers
available on the market. Patent and trade mark databases are very useful tools
to gather information on existing competitors5. Here is an example of such an
analysis:
Out of 899 patents in crash sensors, the following top commercial patent owners can be identified:
BOSCH
BREED AUTOMOTIVE TECHNOLOGY
SIEMENS
VOLKSWAGEN
AUTOMOTIVE SYST LAB
FORD
AUTOMOTIVE TECHNOLOGIES INT
Among
those,
Bosch,
Siemens
and
Delphi
Technologies
are
our
closest competitors, given
the technical features of
the sensors which they
offer.
A
detailed
comparison
of
our
technology versus their
own systems is provided
in the table below.
HITACHI
TRW INC
AUTOLIV DEV AB
BAYERISCHE MOTOREN WERKE AG
DAIMLERCHRYSLER
TOYOTA
KRIV ORE MINING
MITSUBISHI
KOMATSU ZENOAH CO LTD
HS TECHN & DESIGN
HONDA
MATSUSHITA
DELCO ELECTRONICS CORP
NIPPONDENSO
SUMITOMO
MEKHANOBR
DELPHI TECHNOLOGIES
SENSOR TECHNOLOGY
HYUNDAI
0
5
10
15
20
25
30
35
40
45
5
For details on trade mark search, please consult the fact sheet “How to search for Trade Marks”
available in the online library.
12
The European IPR Helpdesk
www.iprhelpdesk.eu
GET IN TOUCH
For comments, suggestions or further information, please contact
European IPR Helpdesk
c/o infeurope S.A.
62, rue Charles Martel
L-2134, Luxembourg
Email: service@iprhelpdesk.eu
Phone: +352 25 22 33 - 333
Fax: +352 25 22 33 – 334
©istockphoto.com/Dave White
ABOUT THE EUROPEAN IPR HELPDESK
The European IPR Helpdesk aims at raising awareness of Intellectual Property (IP) and Intellectual Property
Rights (IPR) by providing information, direct advice and training on IP and IPR matters to current and potential
participants of EU funded projects. In addition, the European IPR Helpdesk provides IP support to EU SMEs
negotiating or concluding transnational partnership agreements, especially through the Enterprise Europe
Network. All services provided are free of charge.
Helpline: The Helpline service answers your IP queries within three working days. Please contact us via
registration on our website – www.iprhelpdesk.eu – phone or fax.
Website: On our website you can find extensive information and helpful documents on different aspects of IPR
and IP management, especially with regard to specific IP questions in the context of EU funded programmes.
Newsletter and Bulletin: Keep track of the latest news on IP and read expert articles and case studies by
subscribing to our email newsletter and Bulletin.
Training: We have designed a training catalogue consisting of nine different modules. If you are interested in
planning a session with us, simply send us an email at training@iprhelpdesk.eu.
DISCLAIMER
This Fact Sheet has been initially developed under a previous edition of the European IPR Helpdesk (20112014). At that time the European IPR Helpdesk operated under a service contract with the European
Commission.
From 2015 the European IPR Helpdesk operates as a project receiving funding from the European Union’s
Horizon 2020 research and innovation programme under Grant Agreement No 641474. It is managed by the
European Commission’s Executive Agency for Small and Medium-sized Enterprises (EASME), with policy
guidance provided by the European Commission’s Internal Market, Industry, Entrepreneurship and SMEs
Directorate-General.
Even though this Fact Sheet has been developed with the financial support of the EU, the positions expressed
are those of the authors and do not necessarily reflect the official opinion of EASME or the European
Commission. Neither EASME nor the European Commission nor any person acting on behalf of the EASME or the
European Commission is responsible for the use which might be made of this information.
Although the European IPR Helpdesk endeavours to deliver a high level service, no guarantee can be given on
the correctness or completeness of the content of this Fact Sheet and neither the European Commission nor the
European IPR Helpdesk consortium members are responsible or may be held accountable for any loss suffered
as a result of reliance upon the content of this Fact Sheet.
Our complete disclaimer is available at www.iprhelpdesk.eu.
© European Union (2015)
13